Applied Energetics, Inc. Files 10-Q for Period Ended March 31, 2024

AI Summary

APPLIED ENERGETICS, INC. (AERGP) filed a Quarterly Report (10-Q) with the SEC on May 13, 2024. Filed a 10-Q report for the quarterly period ended March 31, 2024. Submitted all required reports for the preceding 12 months. Submitted electronically every Interactive Data File required by Rule 405 of Regulation S-T. Identified as a smaller reporting company. Not a shell company.

Why It Matters

For investors and stakeholders tracking APPLIED ENERGETICS, INC., this filing contains several important signals. This filing provides an update on the company's financial performance and operational status for the first quarter of 2024. As a smaller reporting company, the detailed financial disclosures may differ from larger filers, impacting investor analysis.

Risk Assessment

Risk Level: low — APPLIED ENERGETICS, INC. shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not contain immediate red flags or significant negative disclosures, indicating a low level of immediate risk from this specific document.

Analyst Insight

Review the full 10-Q filing for detailed financial statements, management discussion, and risk factors to assess Applied Energetics' current financial health and future prospects.

Key Numbers

• 2024-03-31 — Quarter End Date (Period covered by the 10-Q filing)
• 2024-05-13 — Filing Date (Date the 10-Q was filed)
• 001-14015 — Commission File Number (SEC identifier for the company)
• 77-0262908 — IRS Employer Identification Number (Company's tax identification number)

Key Players & Entities

• APPLIED ENERGETICS, INC. (company) — Registrant
• March 31, 2024 (date) — Quarterly period ended
• 001-14015 (other) — Commission File Number
• 77-0262908 (other) — IRS Employer Identification Number
• 9070 S. Rita Road , Suite 1500 Tucson , Arizona 85747 (address) — Principal Executive Offices
• 520-628-7415 (phone) — Registrant's telephone number
• IONATRON, INC. (company) — Former company name
• US HOME & GARDEN INC (company) — Former company name

FAQ

Industry Context

Applied Energetics operates in the Search, Detection, Navigation, Guidance, and Aeronautical Systems industry, as indicated by its SIC code 3812.

Regulatory Implications

The filing is made pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, requiring regular reporting for public companies.

What Investors Should Do

1. Analyze the detailed financial statements within the 10-Q for revenue, expenses, and profitability.
2. Review the Management's Discussion and Analysis (MD&A) section for insights into business operations and future outlook.
3. Examine any disclosed risk factors to understand potential challenges facing the company.

Key Dates

• 2024-03-31: Quarterly Period End — Marks the end of the reporting period for the 10-Q.
• 2024-05-13: Filing Date — Date the 10-Q was officially submitted to the SEC.

Year-Over-Year Comparison

This is the initial 10-Q filing for the fiscal year 2024, following the 10-K filed for the fiscal year ended December 31, 2023.

Key Financial Figures

• $0.001 — ich Registered Common Stock, par value $0.001 per share AERG OTCQB As of May 13, 20
• $15,775 — thly principal and interest payments of $15,775 which was the first payment of twelve r

Filing Documents

• ea0204743-10q_applied.htm (10-Q) — 492KB
• ea020474301ex31-1_applied.htm (EX-31.1) — 10KB
• ea020474301ex31-2_applied.htm (EX-31.2) — 10KB
• ea020474301ex32-1_applied.htm (EX-32.1) — 5KB
• ea020474301ex32-2_applied.htm (EX-32.2) — 5KB
• 0001213900-24-042336.txt ( ) — 3989KB
• aerg-20240331.xsd (EX-101.SCH) — 44KB
• aerg-20240331_cal.xml (EX-101.CAL) — 33KB
• aerg-20240331_def.xml (EX-101.DEF) — 212KB
• aerg-20240331_lab.xml (EX-101.LAB) — 399KB
• aerg-20240331_pre.xml (EX-101.PRE) — 214KB
• ea0204743-10q_applied_htm.xml (XML) — 381KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION ITEM 1. Condensed Consolidated Unaudited Financial Statements 1 Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023 1 Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (Unaudited) 2 Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2024 and 2023 (Unaudited) 3 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (Unaudited) 4 Notes to Condensed Consolidated Unaudited Financial Statements 5 ITEM 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 16 ITEM 4.

Controls and Procedures

Controls and Procedures 22

OTHER INFORMATION

PART II. OTHER INFORMATION ITEM 1.

Legal Proceedings

Legal Proceedings 23 ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds 23 ITEM 5 Other Information 23 ITEM 6. Exhibits 23

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS APPLIED ENERGETICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS March 31, December 31, 2024 2023 (unaudited) Assets Current assets Cash and cash equivalents $ 1,007,840 $ 1,319,526 Accounts receivable 316,697 567,792 Other assets 343,124 148,338 Total current assets 1,667,661 2,035,656 Long-term assets Property and equipment - net 382,124 434,563 Right of use asset - operating 1,007,612 1,054,736 Security deposit 17,004 17,004 Total long-term assets 1,406,741 1,506,303 Total assets $ 3,074,402 $ 3,541,959 Liabilities and Stockholders' (Deficit) Equity Current liabilities Accounts payable $ 249,610 $ 312,958 Subscription payable 1,221,600 - Notes payable 189,302 - Due to related parties 50,000 50,000 Operating lease liability - current 179,023 166,927 Deferred revenue 139,326 308,908 Accrued expenses 77,117 40,510 Accrued dividends 48,079 48,079 Total current liabilities 2,154,058 927,382 Long-term liabilities Operating lease liability - non-current 946,866 994,491 Total long-term liabilities 946,866 994,491 Total liabilities 3,100,924 1,921,873 Stockholders' (Deficit) Equity Series A convertible preferred stock, $ .001 par value, 2,000,000 shares authorized and 13,602 shares issued and outstanding at March 31, 2024 and December 31, 2023 (Liquidation preference $ 340,050 and $ 340,050 , respectively) 14 14 Common stock, $ .001 par value, 500,000,000 shares authorized; 211,370,639 and 211,236,688 shares issued and outstanding at March 31, 2024 and at December 31, 2023, respectively 211,371 211,237 Additional paid-in capital 113,187,766 112,223,129 Accumulated deficit ( 113,425,673 ) ( 110,814,294 ) Total stockholders' (deficit) equity ( 26,522 ) 1,620,086 Total Liabilities and Stockholders' (Deficit) Equity $ 3,074,402 $ 3,541,959 See accompanying notes to condensed consolidated financi

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) NOTE 1 – ORGANIZATION OF BUSINESS, GOING CONCERN AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Applied Energetics, Inc. and its wholly owned subsidiary North Star Power Engineering, Inc. ("North Star") (collectively, "company," "Applied Energetics," "we," "our" or "us"). All intercompany balances and transactions have been eliminated. The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information, the instructions for Form 10-Q and the rules and regulations of the SEC. Accordingly, since they are interim statements, the accompanying unaudited condensed consolidated financial statements do not include all of the information and notes required by GAAP for annual financial statements, but reflect all adjustments consisting of normal, recurring adjustments, that are necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. Interim results are not necessarily indicative of the results that may be expected for any future periods. The December 31, 2023, balance sheet information was derived from the audited financial statements as of that date. The interim unaudited condensed consolidated financial statements should be read in conjunction with the company's audited consolidated financial Going Concern The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. For the three months ended March 31, 2024, the company incurred a net loss of $ 2,611,379 , had negative cash flows fro

financial statements are issued

financial statements are issued. The company's existence depends upon management's ability to develop profitable operations. Management is devoting substantially all of its efforts to developing its business and raising capital and there can be no assurance that management's efforts will result in profitable operations or enable it to overcome future liquidity concerns. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability of assets, the amount or classification of liabilities or otherwise that might be necessary should the company be unable to continue as a going concern. 5 APPLIED ENERGETICS, INC. NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) Trade conditions, such as exacerbated supplier shutdowns and delays, contribute to this uncertainty. Additionally, Russia's military action in Ukraine, war in the Middle East, and related economic sanctions around the globe, could impact the company's ability to source necessary supplies and equipment which could materially and adversely affect its ability to continue as a going concern. In addition, the company's ability to continue as a going concern may depend on its ability to raise capital, which may be impacted by these events, including as a result of increased market volatility, or decreased market liquidity. This may result in third-party financing being unavailable on terms acceptable to the company or at all. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. To further improve its liquidity position, the company's management continues to explore additional equity financing through discussions with investment bankers and private investors. The company may be unsuccessful in its effort to secure additional equity financing. The financial statements do not include any adjustments relating to the recoverability of assets and the amount or classification of liabilities that might be necessary should the company be unable to continue as a going concern. Applied Energetics, Inc. is a corporation organized and existing under the laws of the State of Delaware. Our headquarters are located at 9070 S. Rita Road Suite 1500, Tucson, Arizona, 85747, including office and laboratory space, and our telephone number is (520) 628-7415. Use of Estimates The preparation of unaudited condensed financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. Man

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) Significant Concentrations and Risks We maintain cash balances at a commercial bank, and, at times, balances exceed FDIC limits. As of March 31, 2024, $ 505,111 was uninsured. NOTE 2 – NEW ACCOUNTING STANDARDS The company has reviewed all issued accounting pronouncements. The company does not expect the adoption of any pronouncements to have an impact on its results of operations or financial position. NOTE 3 – NOTES PAYABLE Premium Financing On March 12, 2024, the company entered into an agreement with Oakwood D&O Insurance to provide financing in the amount of $ 189,302 for the insurance premium associated with two D&O policies. Both policies commenced March 12, 2024, and provided coverage for the next 15 months, expiring June 11, 2025. The loan bears interest at a fixed rate of 9.50 % per annum and required the company to prepay $ 41,057 and appears on the balance sheet as a current asset. On April 12, 2024, the company commenced monthly principal and interest payments of $15,775 which was the first payment of twelve remaining months due of $ 189,302 , the last payment of which is scheduled to be made on March 12, 2025. As of March 31, 2024, the outstanding balance on the note was $ 189,302 and was recorded as notes payable, a currently liability, in the company's unaudited condensed consolidated balance sheet. Notes Payable Reconciliation The following reconciles notes payable as of March 31, 2024, and December 31, 2023: March 31, 2024 December 31, 2023 Beginning balance $ - $ 400,000 Notes payable 189,302 155,541 Payments on notes payable - ( 555,541 ) Total 189,302 - Less-Notes payable – current 189,302 - Notes payable – non-current $ - $ - 7 APPLIED ENERGETICS, INC. NOTES TO CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) Future principal payments for the company's Notes as of March 31, 2024, are as follows: 2024, nine months ended $ 141,977 2025 47,325 Thereafter - Total $ 189,302 The company's note payable balance of $ 189,302 is due within the next twelve months, in accordance with the terms of note payable. NOTE 4 – DUE TO RELATED PARTIES It has come to the board's attention that on July 31, 2018, our now deceased CEO deposited $ 50,000 into the company's account. Although it has been suggested that the funds may have been intended for use toward Mr. Dearmin's healthcare, the board does not know for certain what the purpose of the funds were or the nature of any intended investment. Accordingly, the board is investigating the appropriate disposition of the funds which will likely be to the estate of Mr. Dearmin. Until such a determination is made, the board does not intend to use these funds for any corporate purpose. For reporting purposes, the company has treated the deposit as a due to related party. NOTE 5 – STOCKHOLDERS' EQUITY Authorized Capital Stock During the three months ended March 31, 2023, the company issued 100,000 shares of common stock upon the exercise of 100,000 options at an exercise price of $ 0.07 a share. As a result, the company received $ 7,000 in cash proceeds as part of the transaction. During the three months ended March 31, 2023, the company issued 75,000 shares of common stock upon the exercise of 75,000 options at an exercise price of $ 0.13 a share. As a result, the company received $ 9,750 in cash proceeds as part of the transaction. During the three months ended March 31, 2023, the company issued the remaining 9,584 shares of common stock pursuant to a restricted stock agreement dated May 2021. During the three months ended March 31, 2024, the company issued 30,000 shares of common stock upon the exercise of 30,000 options at an exercise price of $ 0.07 a share. As

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) Preferred Stock As of March 31, 2024, and December 31, 2023, there were 13,602 shares of Series A Redeemable Convertible Preferred Stock (the "Series A Preferred Stock") issued and outstanding, respectively. The company has not paid the dividends commencing with the quarterly dividend due August 1, 2013. Dividend arrearages as of March 31, 2024, including previously accrued dividends of $ 48,079 included in our balance sheet total approximately $ 371,127 . Our Board of Directors suspended the declaration of the dividend, commencing with the dividend payable as of February 1, 2015, since we did not have a surplus (as such term is defined in the Delaware general corporation Law) as of December 31, 2014, until such time as we have a surplus or net profits for a fiscal year. Our Series A Preferred Stock has a liquidation preference of $ 25.00 per Share. The Series A Preferred Stock bears dividends at the rate of 6.5 % of the liquidation preference per share per annum, which accrues from the date of issuance, and is payable quarterly. Dividends may be paid in: (i) cash, (ii) shares of our common stock (valued for such purpose at 95 % of the weighted average of the last sales prices of our common stock for each of the trading days in the ten trading day period ending on the third trading day prior to the applicable dividend payment date), provided that the issuance and/or resale of all such shares of our common stock are then covered by an effective registration statement and the company's common stock is listed on a U.S. national securities exchange or the Nasdaq Stock Market at the time of issuance or (iii) any combination of the foregoing. If the company fails to make a dividend payment within five business days following a dividend payment date, the dividend rate shall immediately and automatically increase by 1 % from 6.5 % of the liquidation preference per offered share of Series A preferred stock to 7.5 % of

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS MARCH 31, 2024 (Unaudited) If the Corporation pays all or a portion of the Purchase Price in Common Stock, no fractional shares of Common Stock will be issued; instead, the company will round the applicable number of shares of Common Stock up to the nearest whole number of shares; provided that the Corporation may pay the Purchase Price (or a portion thereof), whether in cash or in shares of Common Stock, only if the Corporation has funds legally available for such payment and may pay the Purchase Price (or a portion thereof) in shares of its Common Stock only if (i) the Common Stock is listed on a U.S. national securities exchange or the Nasdaq Stock Market at the time of issuance and (ii) a shelf registration on the Payment Date unless such shares are eligible for immediate resale in the public market by non-affiliates of the Corporation. Share-Based Payments Effective November 12, 2018, the Board of Directors of Applied Energetics, Inc. adopted the 2018 Incentive Stock Plan. The plan provides for the allocation and issuance of stock, restricted stock purchase offers and options (both incentive stock options and non-qualified stock options) to officers, directors, employees and consultants of the company. The board reserved a total of 50,000,000 shares for possible issuance under the plan. We have, from time to time, also granted non-plan options and restricted stock units to certain officers, directors, employees and consultants. Total stock-based compensation expense fo

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